Cross sector approach would see organisations flourish financially

Scotland’s charities would rake in millions of pounds extra every year if funding was overhauled.

An estimated £300m could be gained by Scots and Northern Irish charities if a raft of proposals put forward by a new report by the Law Family Commission on Civil Society.

Extra cash would flow if collaboration between businesses, policymakers and civil society was boosted with social progress in Scotland and Northern Ireland flourishing with all three sectors “firing on all cylinders and working effectively together”.

Among its findings on Scotland, the commission said that there is room to significantly boost philanthropy in the country and across the UK, with its research suggesting that if the Scottish public gave a similar share of their wealth to charity as the public in New Zealand or Canada, it would provide another £300 million a year for the third sector.

It recommended a “radical shift” in approach from funders away from short-term and restrictive funding and towards support for core costs and investment in people, processes and organisational development.

Lord Gus O’Donnell, chair of the Law Family Commission on Civil Society, said: “Charities are a key part of the solution to every challenge faced. Whether it is making communities safer, greener, healthier, more prosperous or more equal, charities must be at the decision-making table and operating at their optimum level if we are truly to achieve the change we need. 

“As both the cost-of-living crisis and the pandemic have shown, charities and community groups make the difference between people eating or missing meals, being heard or left voiceless, and feeling alone or well-supported.”

On Scotland, he added: “The charity sector has grown to employ around 135,000 people in Scotland, but it faces real challenges in meeting the demands that are now placed upon it. There are fewer people giving regularly to charity, including the growing pool of highest earners who are earning more but giving less. Formal volunteering has stagnated. And the way that the funding system for charities works has left holes in charitable provision in some of the places that need it most, as well as disincentivising investment in skills, digital and the infrastructure that allows charities to have the greatest possible impact with the limited resources that they possess. 

“The Law Family Commission on Civil Society is now calling on funders and the Scottish and UK governments to invest strategically in the productivity of the charity sector, the data available to and about it, and in the changes needed to unlock greater giving.

“Alongside this investment, there must be a dramatic acceleration in the partnership between civil society and business and a reset of the relationship between civil society and government. With this investment, acceleration and partnership, civil society’s full potential can be unleashed.”

Kirsten Hogg, head of policy and research at the Scottish Council for Voluntary Organisations, said: "At a time when many voluntary organisations in Scotland are facing a perfect storm of rising costs, increasing demand and stagnant or falling income, we welcome the commission’s recommendations as a way to stimulate thinking and action on how the voluntary sector in Scotland can be sustained, and its potential unleashed.

"Recommendations relating to long term, unrestricted funding and investment in core costs will be particularly welcomed by organisations facing financial difficulties and add weight to the recent on-paper commitment to Fairer Funding from the Scottish Government, which we need to see translated into action.

"The encouragement by the commission to think more about the connection between voluntary, public and private sectors taps into a number of live discussions in Scotland and provides very useful food for thought about how best to bring these relationships to the fore."